OIG report finds Medicare overpaying for CGMs and provides

Dive Transient:

• A authorities watchdog recommends Medicare cut back funds for steady glucose screens and provides.
• A report issued Tuesday by the Division of Well being and Human Providers’ Workplace of Inspector Normal discovered that Medicare funds for the diabetes gadgets and provides exceed provider prices and retail costs.
• The OIG really helpful the CMS use its aggressive bidding program or “inherent reasonableness” authority to cut back funds for CGMs. The CMS earlier this yr issued a proposed rule in search of to incorporate insulin pumps and CGMs in a aggressive bidding program, and to vary funds to a month-to-month rental schedule as an alternative of an upfront contract.

Dive Perception:

Medicare first began overlaying CGMs underneath Half B in 2017. Funds for the diabetes gadgets have grown over time as protection has expanded to extra individuals. Half B funds for CGMs and provides elevated from $109 million in 2018 to $1.3 billion in 2023, in line with the report.

The OIG report defines CGMs as a receiver or smartphone utility that may show and save details about a customers’ glucose ranges. The report defines provides as disposable elements, together with glucose sensors and transmitters. 

In whole, the watchdog discovered that Medicare paid $377 million, or 69%, greater than suppliers’ acquisition prices for CGMs and provides between July 2022 and June 2023. For CGM provides specifically, the OIG sees the largest potential for price financial savings. The report discovered that Medicare funds for provides exceeded retail costs by $290 million in a single yr.

The OIG additionally recognized 27 instances the place suppliers overbilled Medicare, receiving funds for higher-risk, Class 3 gadgets once they really supplied lower-risk, Class 2 CGMs. 

The watchdog really helpful the CMS use its present authorities to regulate fee charges and take motion to stop overpayments attributable to suppliers’ improper use of billing codes. The CMS concurred with the report’s suggestions. 

In July, the company issued a proposed rule that might mix CGMs and provides into one month-to-month rental fee. The CMS plans to cut back funds for Class 2 CGMs and provides by its aggressive bidding program, and for Class 3 CGMs and provides by its inherent reasonableness authority. 

Within the CMS’ aggressive bidding program, suppliers compete for contracts to supply tools at decrease costs. Inherent reasonableness provides the CMS authority to appropriate funds that it determines are “grossly poor or extreme.” 

Earlier this month, medical machine lobbyists and the co-chairs of the Home and Senate Diabetes Caucuses urged the CMS to not finalize the proposed fee adjustments, saying they would cut back and complicate entry to CGMs and insulin pumps.

J.P. Morgan analyst Robbie Marcus wrote in a analysis word on Tuesday that the report alerts potential future aggressive bidding within the diabetes area.

“Whereas this doesn’t explicitly imply that CGM aggressive bidding is coming, in our view, it does increase the chance,” Marcus wrote. 

For Dexcom, one of many main makers of CGMs, buyers are already factoring in a excessive chance of aggressive bidding into the corporate’s inventory worth, Marcus added. For Abbott, the opposite principal competitor within the area, Marcus expects much less of an influence because of decrease pricing throughout the board and particularly within the CMS’ sturdy medical tools channel.